Moorhead Public Service working to avoid increase in water rates

Moorhead Public Service officials said Tuesday that they are working on ways to reduce or eliminate the need for a 3 percent increase in water rates being considered for 2010.

The comments were made at a public hearing on the proposed increase, as well as a possible 4 percent hike in electrical rates.

The utility said the boost in electrical rates is necessary to cover higher prices the utility pays for power supplies and to cover an anticipated increase in the annual transfer the utility makes to the city of Moorhead as a kind of payment in lieu of taxes.

The water rate increase is necessary to cover the cost of water main work scheduled for next year and to make up for revenue lost by lower consumption of water during the 2009 flood, the utility said.

But MPS General Manager Bill Schwandt said that by taking certain steps, including not filling some positions, a boost in water rates may not be necessary next year.

He said the utility is looking for ways to keep water rates stable until 2012, when the debt for the city’s water treatment plant will be paid off and money can be freed up to help rebuild reserves.

Schwandt said that won’t be possible on the electrical side because of increased costs the utility faces for things like power.

The transfer the utility pays to the city of Moorhead each year is expected to go up by 9 percent in 2010, a $530,000 increase, according to information provided at the hearing.

The total electric transfers to the city of Moorhead in 2010 are projected to be about $6.7 million.

If the utility goes ahead with its proposed rate increases, the impact on an average customer using 800 cubic feet of water each month is expected to be $1.12 per month.

An average residential customer using 1,000 kilowatt hours of power a month could expect to pay $3.53 more per month if the rate increase is approved.

The commission is expected to decide on rate increases at a meeting scheduled for Dec. 15.

If any increases are approved, they would be reflected on bills after Jan. 1, 2010.

Moorhead Public Service officials encourage anyone who wants to comment on the proposed rate increases to visit the utility’s Web site, www.mpsutility.com.